These articles on retirement savings can be helpful, but also frightening, particularly for those who feel like they’ve fallen behind. You may be wondering how you can get ahead financially or curious if it is even possible.
The good news is no matter where you are financially, it’s never too late to start again, catch up, or move ahead.
If you are interested in learning how to get ahead financially in your 40s, 50s, 60s, and beyond your 20s, read these tips on boosting your finances.
But before we dive into our tips, let’s discuss how to answer your burning question “How am I doing financially?”
How am I doing financially? A check
Have you wondered lately why this question is important? There’s no better time to ask yourself and answer it than now with a financial checkup. Like it is critical to maintain your physical health, it’s also important to keep up with your financial wellness.
One of the key steps in a financial health exam is figuring out where you stand financially. In order to do this, you should take an inventory of your outstanding debts, expenses, and income. This will guide you to where you should focus your attention and efforts.
Regardless of your budget, you can do vital good by doing this.
It’s easy to look back and think of all of the things you could have or should have done in your 20s and 30s to help you achieve your goals financially. But there’s no way to change the past.
Fortunately, no matter your financial situation or age, it’s never too late to change your finances and future.
How to get ahead financially in your 40s
In your 40s is a critical time for earning income, building savings, paying off debt, and preparing for retirement.
1. Build up an emergency fund
There is no better time than your 40s to start saving for emergencies. If you have no emergency fund, now is the time to build one. Emergencies can occur at any age, but having one in place is essential for protection in your 40s.
In your 40s, you may be responsible for children, elderly parents, or other family members (and perhaps even yourself), so it is crucial that you have the skills to handle anything that comes up.
How much you can save is up to you, but a good rule is to have at least three to six months of your regular living expenses saved in an account that is easy to access and liquid.
2. Develop a plan for aging parents
While not everyone will care for their parents, in-laws, or other older relatives (financially or otherwise), you should be ready if this is a possibility. Many adult children become caregivers for their aging parents or make consequential financial decisions on their behalf, and it is important to understand what this means ahead of time.
Think about who in your household might need your assistance in the future, whether you’re prepared to provide this assistance, and how much it could cost financially. If you haven’t had a discussion about finances with your parents before, now is a good time to do so.
Make sure you create a budget that includes helping your people.
3. Plan for college savings, but not at the expense of your retirement
If you haven’t started saving for your children’s education yet, your 40s are an appropriate time to start doing that. Consider contributing to a 529 plan or a custodial account monthly.
If you devote yourself fully to working, you will have given your children a significant head start toward affording their own education by the time they leave high school. One caveat: you would give up nothing for your children, but please don’t sacrifice your retirement for them.
Be aware that there are other ways to pay for college that do not require you to forfeit your future. Your children might utilize other ways to pay for school that do not require you to sacrifice your goals. You have only so many years left to save for retirement and see your investments grow.
4. Start investing if you haven’t already
Money invested is the best way to get ahead financially in your 40s. Since you aren’t currently investing your money, now is the perfect time to start saving! Constructing a diversified investment portfolio will help you get ahead and plan for the future.
There’s no need to spend a lot of money to start investing in shares. For instance, some Robo-Advisors allow you to begin with just $5! Don’t let fear and lack of knowledge hold you back.
We host a free course that will teach you everything you need to know about financially savvy investment.
How to get ahead financially in your 50s
To get started in your 50s, you can accomplish everything that you were unable to do before and a lot more. These recommendations are similar to those you would hear in your 40s, if not more so.
1. Create a get out of debt plan
Use this time, when you’re likely still working, to create a plan for your debt. Many people in their 50s have numerous debts, such as a mortgage, car loan, credit card bill, and student loan. Before you retire, it is critical that you devise a plan to pay off these debts.
The first step to getting out of debt is understanding what you owe. There are many ways to create a debt-free plan. You could pay off your debt with the highest interest rate first, or the one with the most anxiety, and continue from there.
2. Develop a retirement plan
In which regard do you consider retirement? Think about this on a daily basis, dream about it someday, or have you not given it a thought? Where you are on the spectrum in your 50s it is time to put some thought into what you want it to be like to retire.
You should start asking yourself some key questions, such as: Where do I want to live when I retire? When do I want to retire? Will I still have an income or a job (a side hustle, perhaps) when I’m officially retired? How much do I need to retire?
You can use a retirement calculator to determine how much you will need to retire comfortably. From there, you can begin to create a plan. You should have an idea of where you’ll be living after you retire, so you can start planning for your expenditures.
3. 401(k) catch-up contributions
Hopefully, if your firm offers one, you’ve been contributing for many years to your 401(k). Even if you have or not, at 50 years old, you can begin contributing even more to your 401(k) than ever before.
Anyone age 50 or older can contribute an additional $7,500 to their 401(k) on top of the standard limit of $22,500 for 2023. This is a great way to take advantage of a tax advantage and boost your savings before retirement.
How to get ahead financially in your 60s
Your 60s are not too old to get ahead financially. There is no better time to start thinking about your financial future than right before retirement.
1. Live on your retirement budget now
Your retirement budget may be lower than your current one, especially if you are still working. Even if you make less money in retirement, you should practice living on your true retirement budget before you actually need to.
Save money by lowering your expenses and see how much it improves your life.
There’s still time to change your budget while you’re working. For example, you could reduce your current expenses, adjust your retirement plans, or extend your working years.
2. Delay collecting Social Security
Social Security can be a complicated benefit to understand, but it’s well worth your time to learn all you can regarding the program. In general, you can become eligible for benefits at your full retirement age of 62.
However, you can gain an even larger benefit by waiting until your “full retirement age” (either 65 or 67, depending on individual factors). Additionally, if you wait until age 70, you will have the largest benefit.
While everyone’s finances are different, and for some, being the benefactor early is best, if you can, waiting until you reach age 70 to collect Social Security, you’ll get the most from the benefit.
3. Rebalance your investment portfolio
As you approach or enter retirement, it’s a great time to think about your asset allocation. In the coming decades, you’ll be likely to withdraw your investment assets to invest your money.
What does it mean to reprioritize your portfolio? In general, it is selling and buying stocks and bonds so that you can ensure that the allocation and, therefore, the risk, is where you want it to be.
More typically, as one gets older, one wants a more conservative investment mix. That is the case, for example, for someone age 65, who has an allocation of 90% bonds and 10% stocks, while a person thirty years old would have the opposite mix âÃ‚Â€Ã‚Â“ more stocks than bonds.
If you want to understand how these decisions work or how the logistics of selling bonds and stocks work, a good place to start is by educating yourself on investing. You may want to contact a financial expert for advice on how best to customize your retirement goals.
4. Bring in extra income
Even if you’ve reached your 60s and don’t have as much saved or invested as you would like, it’s not too late to catch up. You should continue to look for additional ways to make money even after you retire.
Why not start that new side business you’ve been thinking about? You can also explore other money-making opportunities, such as working part-time in an industry you’re unfamiliar with, selling your extraneous items, or producing passive earnings.
How to get ahead financially at any age
Lastly, there is one tip that regardless of your age you can utilize: Be proactive with your finances. Once you’ve completed a financial health check-up, don’t stop there. There are many methods to go about your situation, but it will take effort.
Designate yourself to learn about personal finance. Take one of Clever Girl Finance’s 100% free classes, purchase a book on investing, or get in touch with a financial advisor. Whatever you do, don’t be stuck, as taking action is the best option for you.
You can get ahead financially no matter what age you are!
Now that you know how to make money regardless of your age, get started today! Getting ahead financially takes hard work.
But it’s available to anyone, at any age. It doesn’t matter what you did or did not do in your twenties or thirties. What matters most is what you do in the present and the future. For that reason, make it a point to start taking steps toward a better future today.